Tag Archives: Santa Fe Public Bank

Forum on public bank proposal set for Monday

By T. S. Last / Journal Staff Writer | The Albuquerque Journal | November 17, 2017

SANTA FE, N.M. — Already halfway through its six-month exercise to examine what next steps need to be taken to establish a public bank in Santa Fe and identify potential barriers, the Public Bank Task Force will hold a public forum on Monday to gather input to be included in an interim report that will be presented to the City Council’s Finance Committee on Dec. 4.
The council passed a resolution earlier this year to establish the nine-member task force so the council can “make an informed decision about submitting an application for a New Mexico Bank Charter for a Public Bank in Santa Fe,” but the idea has been in the works for a few years.

In September 2014, WeArePeopleHere!, a nonprofit group that describes itself as “a grass-roots progressive political action collective,” put on a symposium hosted by Mayor Javier Gonzales exploring the concept of creating a city-owned community bank.

A few months later, the City Council approved a $50,000 contract to conduct a feasibility study that ultimately determined a public bank could potentially improve fiscal management, create a healthier local lending climate and generate better interest rate margins for the city. But some critics are skeptical of the idea and whether a small city like Santa Fe can make a public bank work.

At least initially, the city would be the public bank’s only client. The report said the bank could serve the city by funding capital improvement projects with internal funds without raising taxes or using bond proceeds.

According to a news release, David Buchholtz, an attorney with experience in finance and banking who serves as the task force’s chairman, will provide an update on the committee’s progress to date, and four subcommittees will report on what’s been learned so far, address ongoing research and legal issues, banking regulations, public bank capitalization and governance. But the majority of the 2½-hour meeting will be devoted to “questions and an open dialogue with members of the public about what they would like a Public Bank to achieve for our community.”

The forum will take place from 5:30 to 8 p.m. Monday in the City Council chambers at City Hall.

Task force says city faces many hurdles to creating a public bank

By Tripp Stelnicki | The New Mexican | November 20, 2017

Whether there will someday be a Public Bank of Santa Fe was not decided Monday night, but concerned community members got an earful of the myriad regulatory and capitalization hurdles that must be resolved or further studied before such an initiative — or even an application for one — could move forward.

At a forum in City Hall, the city’s Public Bank Task Force reported on its ongoing investigation into whether the city should establish a chartered public bank, presenting an unvarnished view of the potential stumbling blocks they have intensively researched since August.

Many of the roughly 40 community members in attendance might have hoped for more validation of their interest in the idea, one advocates say could reduce debts and generate income for the city while removing the necessity of outside banking giants.

But the task force progress report came in shades of gray, revealing the path to a prospective public bank is cluttered with potential obstacles and concerns requiring more clarity, from whether the city has the statutory authority to establish a public bank, to whether some functions of a municipal public bank would violate the state’s anti-donation clause, to whether the city has enough money available to get a bank off the ground.

“The city has to have the unrestricted liquidity to make this work,” said Randolph Hibben, a task force member with experience in community banking. “I don’t believe it does.”

Many aspects of the public bank proposition have not yet been determined, including how its independent governance would be established; how it might be staffed, operated and governed; and whether its functions might be limited to the city and other public institutions or might be expanded into a broader community model. These and other regulatory concerns remain to be studied further, task force members said.

“We’re deep into it,” said David Buchholtz, an Albuquerque attorney who chairs the panel. “Do we have all of our answers yet? Probably not.”

Tasked with identifying the pros and cons of a public bank and then delivering “the information needed to make an informed decision” to the City Council in early 2018, the nine-member volunteer task force recommended by Mayor Javier Gonzales and approved by the council has met regularly since August.

Monday’s forum marked the first wide-ranging checkup on the progress made by the advisory panel and its various subgroups.

Their work follows a feasibility study authorized by the City Council in 2014 and completed early last year.

That analysis determined the city could save money if a public bank were established but cautioned any initiative ought to start small and emphasize transparency.

Whether the task force is expected to deliver to councilors a recommendation one way or the other or simply a report on their analyses is unclear. Buchholtz said he would seek clarity from councilors on the Finance Committee in December.

Contact Tripp Stelnicki at 505-428-7626 or tstelnicki@sfnewmexican.com.

Public Banking Task Force nominees confirmed

The Santa Fe City Council unanimously confirmed Mayor Javier Gonzales’ appointments to a new Public Banking Task Force on Wednesday.

The seven-member task force is charged with determining the necessary procedures, timelines and requirements to establish a chartered public bank.

Gonzales appointed J. Wayne Miller, vice president of commercial real estate at Washington Federal; Randolph Hibben, a retired banker; Darla Brewer, a senior forensic auditor with the state Securities Division; Kelly Huddleston, an attorney who founded the New Mexico Consumer Protection Law Center; David Buchholtz, an Albuquerque attorney who did legal work for a local organization advocating for a public bank; Judy Cormier, who has 30 years of consumer banking compliance experience; Elaine Sullivan, a public bank advocate; retired businessman Robert Mang; and city Finance Director Adam Johnson.

The mayor’s appointments, which council members confirmed without questions or discussion, sparked some concerns from the public about impartiality.

“From what I have read, this group, as presented, appears to be more of an advocacy group than one that can, in an unbiased way, evaluate this proposal,” Santa Fe resident Berl Brechner wrote in an email to the mayor and councilors Wednesday.

“Of particular concern,” the email said, “is that three of the proposed members have direct connections to ‘We are people here!’ which in its website contains a subgroup, ‘Banking on New Mexico,’ which has been a vocal advocate for the public bank concept for Santa Fe.”

Mayor makes picks for Public Banking Task Force

Eight months before the end of his four-year term, Mayor Javier Gonzales is recommending appointments to a task force responsible for research that could lead elected officials to dramatically change the way Santa Fe’s city government does its banking.

The task force will help determine requirements to establish a public bank. The nine-member panel must complete its work within six months of its first meeting, possibly making the idea of a public bank a major campaign issue in next spring’s mayoral election.

Public banking leverages a government’s assets to stimulate investment in the community. Examples of public banking include offering low-interest loans to local businesses or low-cost financing for public projects, such as housing and infrastructure.

Gonzales, who has yet to announce whether he will seek a second term, will ask the City Council on Wednesday to confirm his recommended appointees.

The mayor said the task force and his political future are unrelated.

“The public banking issue has nothing [to] do with politics,” he said in a statement, “it’s about making sure we’re putting Santa Fe’s money — the taxpayer’s money — to the best possible use and investing it back into the community for the things that keep our community moving forward.”

He added, “It’s a stretch to try to make this about an election, and it takes away from what we should be focused on — a debate about the merits of the public banking idea itself.”

While Gonzales is nominating appointees, as he does for other city committees and boards, he is not acting independently. In April, the governing body adopted a resolution to create a Public Banking Task Force that includes three members with financial or banking experience, two members with legal experience, one member with regulatory experience and two at-large resident members, plus the finance director.

Gonzales, who has championed the notion of studying whether a public bank would work in Santa Fe, said he heard about a local movement to create a public bank when he was on the campaign trail more than three years ago and decided then that he would explore the idea further if he won election.

“As I got more into the campaign and learned the stories and the challenges of Santa Fe and recognized that access to capital and new funding sources were limited,” he said in 2014, “the idea of a public bank became more and more important to me.”

Since then, the city has hosted a public banking symposium and commissioned a feasibility study that determined the city could benefit financially if it established a chartered public bank.

Now, the city is taking the next step by appointing a nine-member task force that will help the governing body determine the necessary timelines and procedures to start a public bank and to “make recommendations … in preparation for the governing body to make an informed opinion.”

Twenty-seven people applied to serve on the task force, from a former city attorney to a retired physicist.

“I’m very pleased that we received [27] letters of interest and résumés from a good mix of backgrounds, experiences and expertise,” City Councilor Renee Villarreal, lead sponsor of the resolution creating the task force, said shortly after the city’s deadline to submit applications to serve. “It’s exciting to have so much interest and commitment to serve.”

Here are Gonzales’ recommended appointments:

Adam Johnson is the city’s finance director. The resolution creating the task force called for the city finance director to serve on it. Johnson, who joined the city in February 2016, previously worked as Santa Fe County’s budget administrator.

J. Wayne Miller is an Española native who has been vice president of commercial real estate at Washington Federal since May 2005. Before that, he worked as a senior vice president at both Century Bank and First National Bank of Santa Fe.

“I love our community and would like to see the business environment grow to create new job opportunities for our youth, where they do not have to leave Santa Fe to find employment,” he wrote in his letter of interest.

Randolph Hibben has founded a number of community banks in suburban Chicago. Hibben retired in 2008 as chairman and CEO of Lake Forest Bank & Trust Co. in Illinois.

“My partners and I founded the bank in 1991 to provide a low-cost community-banking alternative to the major national players that predominated at the time,” he wrote in his application.

Hibben, who serves as vice president of the Santa Fe Habitat for Humanity board, wrote that he was introduced to the idea of a public bank through the “We are people here!” initiative. He said Craig Barnes, who led the effort until his death last year, finally convinced him the concept could be viable.

“I have a number of questions and concerns but there appears to be a niche for public banks in our nation’s financial system,” he wrote. “I see no reason why the city of Santa Fe shouldn’t fully explore becoming one of the first municipalities to establish a grassroots bank of the people.”

Darla Brewer is a financial analyst with more than 15 years of experience. She is a senior forensic auditor with the state Securities Division, working with a team of attorneys, financial auditors and others to investigate fraud, embezzlement and violations of securities law.

Brewer, who has worked for the State Investment Council and state superintendent of insurance, also is the creator and interviewer of a radio show called New Era Economy.

“My vision is to combine my passion for finance with my passion for communication to help form a deeper understanding of how profit can coexist with human, social and environmental impacts,” she wrote in her application letter.

Kelly Huddleston, an attorney, is the founder and owner of the New Mexico Consumer Protection Law Center and Huddleston Law LLC. She said she is interested in exploring the public bank option after having worked as a consumer protection lawyer dealing directly with bank issues and abuses for the past seven years.

“My primary interest in joining this task force would be to research the national and state legal framework necessary for creating a public bank and to clearly lay out the regulatory steps in a straightforward manner for [the governing body] and the public to consider,” she wrote.

Huddleston said she is also interested in sharing what she learns in Santa Fe.

“On a more personal note, I am a member of a tribe in Oregon, and they are interested in creating a bank of their own,” she wrote. “It is my hope that I can take what I learn in this process to help out my tribe as well.”

David Buchholtz is a partner in an Albuquerque-based law firm with an office in Santa Fe. He has served as lead bond counsel to the city of Albuquerque, the New Mexico Finance Authority and The University of New Mexico.

“I did some legal work for the ‘We are people here!’ foundation [and] Mr. [Craig] Barnes before he passed away,” Buchholtz said in an interview, referring to a group that has pushed for the city to establish a public bank.

“I’ve been talking to those folks. I have an expertise in government finance and such, so they asked me whether I would be interested to do this, and I said, ‘You know, so long as I’m not taking the place of a person who lives in Santa Fe.’ I have an office up there, but I haven’t lived there for a long time.”

Buchholtz, who counsels private businesses and governments in a variety of matters pertaining to growth, corporate governance affairs and government relations, also has served as state chairman of the New Mexico Anti-Defamation League.

Judy Cormier, who moved to Santa Fe from the East Coast with her husband four years ago, has 30 years of consumer banking compliance experience.

“I have built successful compliance programs within two separate institutions and was chief compliance officer/director of consumer compliance for 11 years,” she wrote in her application.

Elaine Sullivan is a founding member of “We are people here!” and now serves as president of the organization and its initiative, Banking on New Mexico, which advocates for a public bank “to democratize our local economy and support the city in its stewardship of the peoples’ money.”

Sullivan has two master’s degrees, one in education and the other in applied behavioral science.

“I am delighted that a task force will now address the questions yet to be answered about whether a chartered public bank is a fit for our city,” she wrote. “I would like to help ensure that qualified due diligence is applied to this research, in whatever ways I can be helpful.”

Robert Mang co-founded and retired from the Regenesis Group, a Santa Fe-based international consulting company to developers, architects, civil engineers and planners.

“I am particularly interested in the potential a public bank has to offer our citizens, both in savings to the city as well as the greater beneficial impact that would come from investing its funds locally,” Mang wrote in his application letter.

What if People Owned the Banks, Instead of Wall Street?

When Craig Brandt marched into the City Council chambers in Oakland, California, in the summer of 2015, he was furious about fraud.

The long-time local attorney and father of two had been following the fallout from the Libor scandal, a brazen financial scam that saw some of the biggest banks on Wall Street illegally manipulate international interest rates in order to boost their profits. By some estimates, the scheme cost cities and states around the country well over $6 billion. In June of 2015, Citigroup, JPMorgan Chase, and Barclays, among other Libor-rigging giants, pleaded guilty to felony charges related to the conspiracy and agreed to pay more than $2.5 billion in criminal fines to US regulators. But, for Brandt, that wasn’t enough. He wanted the banks banished, blocked from doing business in his city.

“I was totally pissed about it,” he says. “It was straight-up fraud.”

So, in a small act of stick-it-to-the-man defiance, Brandt drafted a resolution that barred the municipality from working with any firm that had either committed a felony or had recently paid more than $150 million in fines. He presented the homespun and eminently reasonable legislation to city officials and urged them to adopt it.

“The city councilors said they couldn’t do it,” Brandt says. “If they did, they wouldn’t have a bank left to work with. They said there wouldn’t be any bank big enough to take the city’s deposits.” Oakland, it seemed, was hopelessly dependent on ethically dubious and occasionally criminal financial titans. Brandt, however, was undeterred.

After the City Council turned him down, he started looking for other ways to wean Oakland off Wall Street. That’s when he fell in with a group of locals who have been nursing an audacious idea. They want their city to take radical action to combat plutocracy, inequality, and financial dislocation. They want their city to do something that hasn’t been done in this country in nearly a century, not since the trust-busting days of the Progressive Era. They want their city to create a bank—and, strange as the idea may seem, it’s not some utopian scheme. It’s a cause that’s catching on.

Across the country, community activists, mayors, city council members, and more are waking up to the power and the promise of public banks. Such banks are established and controlled by cities or states, rather than private interests. They collect deposits from government entities—from school districts, from city tax receipts, from state infrastructure funds—and use that money to issue loans and support public priorities. They are led by independent professionals but accountable to elected officials. Public banks are a way, supporters say, to build local wealth and resist the market’s predatory predilections. They are a way to end municipal reliance on Wall Street institutions, with their high fees, their scandal-ridden track records, and their vile investments in private prisons and pipelines. They are a way, at long last, to manage money in the public interest.

Since 2011, advocates from a national nonprofit called the Public Banking Institute have traveled across the country, preaching the practical benefits of public banking and recruiting or training activists and organizers to take up the cause. They have found willing and enthusiastic supporters from coast to coast. The movement has been embraced in Philadelphia, where the city council held hearings on the idea last year. It’s been championed in Seattle and San Francisco, where a number of city supervisors are calling for a task force to study public banking. It’s taken root in Santa Fe, with backing from the mayor, and in Oregon, Vermont, and even New Jersey, where a leading Democratic gubernatorial candidate, Phil Murphy, has proclaimed his desire to create a state bank right next door to the financial capital of the world.

“I believe this is the wave of the future,” says Craig Brandt, who is now a leader of Friends of the Public Bank of Oakland, the group advocating for public banking in the city. “And I hope Oakland will be the first one out the door to do it.”

The city is well on its way. Last November, the Oakland City Council passed a resolution announcing their intention to explore the creation of a public bank. In February, elected officials and community activists gathered at City Hall for a packed forum on the benefits of a public bank, including the possibility that it could hold deposits from the state’s multibillion-dollar cannabis industry and help promote affordable-housing development. This summer, meanwhile, the council will likely vote on whether to dedicate as much as $100,000 to fund a feasibility study that will explore the technical requirements of creating an independent publicly owned financial institution in Oakland.

“The fundamental point is to have a bank whose purpose is to be responsive to community needs,” says Oakland Councilmember Rebecca Kaplan, a key backer of the local public-banking movement. “This would allow us to save money compared to traditional corporate bank rates, and it would allow us to fund vital projects based on community need rather than having those decisions driven by the profit motive.” She says the City is also interested in the possibility of creating a regional public bank by partnering with neighboring cities like Berkeley and Richmond, California.

“The more folks on board,” she said, “the stronger the support for taking this kind of action.”

Public banks have a long, though subterranean, history in the United States that stretches back to the days of Benjamin Franklin, who helped establish a public land bank in Pennsylvania to provide cheap loans to small farmers. Even today many public institutions, from the Federal Deposit Insurance Corporation to the Small Business Administration to the Federal Housing administration, are essential components of America’s banking system. But there’s only one true public bank in this country and it’s not in Washington or New York or some coastal liberal enclave. It’s in North Dakota, where it has survived and thrived for nearly a century.

First established in 1919 by populist state legislators eager to extend credit to cash-strapped farmers and ranchers, the state-owned Bank of North Dakota (BND) is now a modern and multifaceted financial juggernaut. The bank holds deposits from government agencies. It provides low-cost credit for school construction and municipal infrastructure projects. It refinances student debt at reduced interest rates. Rather than opening branches of its own, it generously partners with local community banks and credit unions tos issue small-business, home, and agricultural loans. Best of all, it funnels its profits back into state coffers whenever North Dakota has budget troubles. The bank is, in other words, essentially socialist.

It’s also a steady source of profit. Last year, according to its annual report, the Bank of North Dakota saw its 13th consecutive year of record profits, taking in more than $136 million in income while growing its loan portfolio by $449 million dollars. And, unlike some of its counterparts, the bank accomplished all that without opening fraudulent accounts or manipulating interest rates or otherwise scamming consumers.

The bank’s success—its long track-record of supporting and stabilizing local economies, sharing the wealth, and minting a profit to boot—has turned it into an intriguing model for cities around the country that are keen to find creative fixes for their ongoing financial woes.

“Public banking is finding its time now because municipal executives have very poor choices,” says Walt McRee, the chair of the Public Banking Institute. “As things deteriorate and have to be fixed, as population grows but jobs decline, as tax receipts dry up, cities can either can cut services, raise taxes, fire people, or privatize things. But those trends are enormously destructive.”

“The prospect of a public bank does something entirely different,” he continues. “It gives a community the ability to liquefy its own assets and lend itself money, to do things it needs to do with money it already has, to hold on to people’s capital instead of sending it to Wall Street.”

Consider municipal bonds. Cities regularly go to the municipal-bond market to raise money for big projects, from school construction to bridge building to park development and more. These bonds, however, come with overhead costs in the form of fees that normally hover around 1 percent, but can climb as high as 10 percent, of the bond’s principal value. A recent report by the University of California Berkeley’s Haas Institute estimates that cities and other public entities pay upward of $4 billion a year in such fees, an enormous sum that serves only to fatten the purses of multinational banks, legal firms, and others involved in the bond-issuance business. A public bank could help reduce these costs and free up funds by enabling a city to deposit its money in a public entity instead of a profit-centric institution like Wells Fargo or JPMorgan Chase. The city would then be able to borrow money from its own bank rather than turning to the Wall Street bond market, with its overhead costs and market-set interest rates. It could, in short, introduce a radical alternative into the realm of municipal finance.

One of the other places where this radical alternative has taken root, surpassing even Bay Area efforts, is Santa Fe, New Mexico. The movement in that city of 67,000 started gathering momentum in 2014, when a small but determined group called Banking on New Mexico held a symposium to promote the idea. More then three hundred people showed up, including the newly elected progressive mayor, Javier Gonzales.

“A group of advocates met with me early in my term,” says Gonzales. “I was really intrigued and excited about an opportunity to explore a different way to have fiscal relationships.”

In early 2015, Santa Fe commissioned a private consultant, in partnership with New Mexico State University, to conduct a feasibility study into public banking. A year later, in January 2016, the report came back and the news was positive: By funding the city’s capital needs and improving municipal cash management, among other functions, a public bank could generate more than $24 million in savings and earnings for Santa Fe over a seven-year period. And such a bank would be particularly effective, says Katie Updike, the consultant who authored the study, if it serviced the city as well as the surrounding county and school district.

“In the case of Santa Fe, where I saw the biggest benefit is if the city, county, and school district worked together,” she says. “When you begin to step out of the jurisdiction of the city and look at the county and the school district too, which are separate entities, all their cash could be pooled and used to fund projects and then it began to get more interesting.”

In late April of this year, based on the results of the feasibility study, Santa Fe’s city council announced that it was creating a nine-person task force to spend six months digging deeper into the legal and financial prerequisites of establishing a public bank. The task force will focus, above all, on developing a governance structure for the bank.

“Governance is a concern for a lot of people,” says Elaine Sullivan, a leader of Banking on New Mexico and a passionate promoter of the cause. “People don’t want the bank run by political officials, and it wouldn’t be. There would be a clear distinction between the public bank, which would be managed by public bankers, and the city of Santa Fe.”

Indeed, the prospect of political interference into a public bank is one of the most common critiques of the idea. If public banks are to succeed in cities around the country, say skeptics and supporters alike, they must to be firmly insulated from the whims of legislative bodies and elected officials.

Here, once again, the Bank of North Dakota offers a model. While overseen by a commission of elected officials, including the state’s governor and attorney general, BND is managed on a day-to-day basis by an independent and highly transparent executive committee of professional financial managers. Its operations are also subject to regular inspection by independent auditors. BND, moreover, maintains public goodwill by declining to compete with local banks. It has no retail locations or ATMs. Rather, it partners with community banks and credit unions to provide its services.

By putting similar structure in place and starting small, Sullivan believes a public bank in Santa Fe could someday be a smash hit. It wouldn’t just provide ample economic benefits to the city but would serve a larger purpose too.

“As the global banks and major corporations that don’t have a moral tether have become more and more powerful, communities have become weaker and weaker and more passive,” she says. “A public bank is about addressing plutocracy. It is about restoring hope.” A public bank, she asserts, would be a red-hot engine of local economic democracy.

This essential fact, more than anything else, explains why the public-banking movement is blossoming in a post-recession, too-big-to-fail America where Donald Trump rules the White House and Wall Street rules Washington.

“We are seeing a resurgence of community-oriented life and activism and vision in this imperial era,” says Councilmember Kaplan of Oakland. “And it has strengthened the movement.”

Santa Fe will have task force to explore public bank idea

SANTA FE — The city of Santa Fe is forming a task force to further explore the idea of creating a public bank.

On Wednesday, the City Council unanimously approved a resolution that would create a nine-member task force appointed by the mayor and approved by the governing body within the next 60 days. The panel will report back to the council after six months with its findings so the council can “make an informed decision about submitting an application for a New Mexico Bank Charter for a Public Bank of Santa Fe.”

The task force will be up of the city’s financial director and appointed members with experience in banking finance, regulation, law, as well as two at large members. They will be asked to look into what legal steps are necessary to establish a public bank, recommend a governance structure to the council, and draft a five-year business plan.

The resolution, introduced by City Councilor Renee Villarreal, also calls for at least two public hearings to obtain community input.

The city of Santa Fe has been exploring the idea of creating a public bank since 2014 when Mayor Javier Gonzales, then in his first year in office, held a day-long symposium on the concept. That led to a feasibility study that determined the city has the potential “to provide enhanced fiscal management, improved net interest rate margins, and a more robust local lending climate.”

 

A Bank Even a Socialist Could Love

“Money is a utility that belongs to all of us,” says Walt McRee. McRee is a velvety-voiced former broadcaster now plotting an audacious challenge to the financial system. He’s leading a monthly conference call as chair of the Public Banking Institute (PBI), an educational and advocacy force formed seven years ago to break Wall Street’s stranglehold on state and municipal finance.

“This is one of the biggest eye-openers of my life,” says Rebecca Burke, a New Jersey activist on the call. “Once you see it, you can’t look back.”

This ragtag group—former teachers, small business owners, social workers— wants to charter state and local banks across the country. These banks would leverage tax revenue to make low-interest loans for local public works projects, small businesses, affordable housing and student loans, spurring economic growth while saving people—and the government—money.

At the heart of the public banking concept is a theory about the best way to put America’s abundance of wealth to use. Cities and states typically keep their cash reserves either in Wall Street banks or in low-risk investments. This money tends not to go very far. In California, for example, the Pooled Money Investment Account, an agglomeration of $69.5 billion in state and local revenues, has a modest monthly yield of around three-quarters of a percent.

When state or local governments fund large-scale projects not covered by taxes, they generally either borrow from the bond market at high interest rates or enter into a public-private partnership with investors, who often don’t have community needs at heart.

Wall Street banks have used shady financial instruments to extract billions from unsuspecting localities, helping devastate places like Jefferson County, Ala. Making the wrong bet with debt, like the Kentucky county that built a jail but couldn’t fill it with prisoners, can cripple communities.

Even under the best conditions, municipal bonds—an enormous, $3.8 trillion market—can cost taxpayers. According to Ellen Brown, the intellectual godmother of the public banking movement, debt-based financing often accounts for around half the total cost of an infrastructure project. For example, the eastern span of the San Francisco-Oakland Bay Bridge cost $6.3 billion to build, but paying off the bonds will bring the price tag closer to $13 billion, according to a 2014 report from the California legislature.

Public banks reduce costs in two ways. First, they can offer lower interest rates and fees because they’re not for-profit businesses trying to maximize returns. Second, because the banks are publicly owned, any profit flows back to the city or state, virtually eliminating financing costs and providing governments with extra revenue at no cost to taxpayers.

“It enables local resources to be applied locally, instead of exporting them to Wall Street,” says Mike Krauss, a PBI member in Philadelphia. “It democratizes our money.”

Legislators, Brown says, commonly object that governments “don’t have the money to lend.” But this misunderstands how banks operate. “We’re not lending the revenues, just putting them in a bank.” That is, the deposits themselves—in this case tax revenues—are not what banks loan out. Instead, banks create new money by extending credit. Deposits simply balance a bank’s books. Public banks, then, expand the local money supply available for economic development. And while PBI has yet to successfully charter a bank, there’s an existing model in the unlikeliest of places: North Dakota.

During the Progressive Era, a political organization of prairie populists known as the Nonpartisan League took control of the state government. In 1919, they established the Bank of North Dakota. It has no branches, no ATMs, and one main depositor: the state, its sole owner. From that deposit base, BND makes loans for economic development, including a student loan program.

BND also partners with local private banks across the state on loans that would normally be too big for them to handle. These loans support infrastructure, agriculture and small businesses. Community banks have thrived in North Dakota as a result; there are more per capita than in any other state, and with higher lending totals. During the financial crisis, not a single North Dakota bank failed.

BND loans are far more affordable than those from private investors. BND’s Infrastructure Loan Fund, for example, finances projects at just two percent interest; municipal bonds can have rates roughly four times as high. And according to its 2015 annual report, the most recent available, BND had earned record profits for 12 straight years (reaching $130 million in 2015), during both the Great Recession and the state’s more recent downturn from the collapse in oil prices. A 2014 Wall Street Journal story described BND as more profitable than Goldman Sachs. Over the last decade, hundreds of millions of dollars in BND earnings have been transferred to the state (although the overall social impact is somewhat complicated by the bank’s role in sustaining the Bakken oil boom).

The long march through the legislatures

Brown founded the Public Banking Institute in 2010, after years of evangelizing in articles and books such as The Web of Debt: The Shocking Truth About Our Monetary System and How We Can Break Free. Since then, by Walt McRee’s estimate, around 50 affiliated groups have sprouted up in states, counties and cities from Arizona to New Jersey.

“I’ve been working against the system all my life,” says Susan Harman of Friends of the Public Bank of Oakland. “I think public banking is the most radical thing I’ve ever heard.” Harman, a former teacher and a onetime aide to New York City Mayor John Lindsay, helped get the Oakland City Council to pass a resolution last November directing the city to determine the scope and cost of a feasibility study for a public bank—a tiny yet promising first step.

A feasibility study completed by Santa Fe, N.M., in January 2016 found that a public bank could have a $24 million economic impact on the city in its first seven years. A resolution introduced last October would create a task force to help the city prepare to petition the state for a charter. “It’s the smallest municipality investigating public banking,” says Elaine Sullivan of Banking on New Mexico, who hopes the task force could complete its business plan by the end of the year. “We’re interrupting the status quo.”

In February 2016, the Philadelphia City Council unanimously voted to hold hearings discussing a public bank. Advocates are now working with the city treasurer to find funds to capitalize the bank.

PBI has faced a rougher path in state legislatures. In Washington, state Sen. Bob Hasegawa (D) has introduced a public banking bill for eight straight years. Despite numerous co-sponsors, the bill can’t get out of committee. Efforts in Arizona and Illinois have also gone nowhere. California Gov. Jerry Brown (D) vetoed a feasibility study bill in 2011, arguing the state banking committees could conduct the study; they never did.

One overwhelming force opposes public banking: Wall Street, which warns that public banks put taxpayer dollars at risk. “The bankers have the public so frightened that [public banking] will destroy the economy,” says David Spring of the Washington Public Bank Coalition. “When I talk to legislators, some are opposed to it because ‘it’s for communists and socialists.’ Like there are a lot of socialists in North Dakota!”

In Vermont the financial industry fought a proposed study of public banking, says Gwen Hallsmith, an activist and former city employee of Montpelier. “We don’t have branches of Bank of America or Wells Fargo in Vermont, but they have lobbyists here.” So Hallsmith got the study done herself, through the Gund Institute at the University of Vermont. It found that a state bank would boost gross domestic product 0.64 percent and create 2,500 jobs.

The state eventually passed a “10 percent” program, using 10 percent of its cash reserves to fund local loans, mostly for energy investments like weatherizing homes. Meanwhile, Hallsmith helped push individual towns to pass resolutions in favor of a state bank— around 20 have now done so. Hallsmith says her advocacy came at the expense of her job; the mayor of Montpelier, in whose office she worked, is a bank lobbyist. Hallsmith now coordinates a citizen’s commission for a Bank of Vermont.

Because of state resistance, PBI has encouraged its supporters to go local. And several issues have emerged to assist. For instance, environmental and indigenous activists have demanded that cities move money from the 17 banks that finance the Dakota Access Pipeline. But therein lies another dilemma: Who else can take the money? Community banks and credit unions lack the capacity to manage a city’s entire funds, and larger banks are better equipped to deal with the legal hurdles involved in handling public money. So divesting from one Wall Street bank could just lead to investing in another.

A public bank could solve this problem, either by accepting cities’ deposits or by extending letters of credit to community banks to bolster their ability to take funds. Lawmakers in Seattle have floated a city- or state-owned bank as the best alternative for reinvestment, and Oakland council member Rebecca Kaplan has connected divestment and public banking as well.

Another opportunity arises with marijuana legalization initiatives. Because cannabis remains illegal at the federal level, most private banks are wary of working with licensed pot shops, fearing legal repercussions. This means many of these shops subsist as all-cash businesses. “It’s seriously dangerous; people arrive in armored cars to City Hall to pay taxes with huge bags of money,” says Susan Harman. In Oakland and Santa Rosa, Calif., public banking advocates are partnering with cannabis sellers to offer public banks as an alternative, which would make the businesses safer while giving the banks another source of capital.

While Donald Trump hasn’t formally introduced a long-discussed infrastructure bill, his emphasis on fixing the nation’s crippling public works has also bolstered the case for public banking. Ellen Brown maintains the country could save a trillion dollars on infrastructure costs through public-bank financing. That’s preferable to Trump’s idea of giving tax breaks to public-private partnerships that want big returns.

From the Great Plains to Trenton

“All it’ll take is the first domino to fall,” says Shelley Browning, an activist from Santa Rosa. “Towns and cities will turn in this direction because there’s no other way to turn.” And PBI members think they’ve found an avatar in Phil Murphy, a Democrat and former Goldman Sachs executive leading the polls in New Jersey’s gubernatorial primary this year.

Murphy has made public banking a key part of his platform. “This money belongs to the people of New Jersey,” he said in an economic address last September. “It’s time to bring that money home, so it can build our future, not somebody else’s.”

Derek Roseman, a spokesman for Murphy, tells In These Times that Bank of America holds more than $1 billion in New Jersey deposits, but only made three small business loans in the entire state in 2015. Troubled state pensions could help capitalize a state-owned bank, and would earn more while paying lower fees.

Murphy’s primary opponent, John Wisniewski, chaired the Bernie Sanders campaign in the state, while Murphy raised money for Hillary Clinton. Some believe Murphy is simply using public banking to cover his Wall Street background—and on many issues, Wisniewski’s policy slate is more progressive. But Brown thinks Murphy’s past primed him to recognize public banking’s power: “It’s always the bankers who get it.”

The first new state-owned bank in a century, chartered in the shadow of Wall Street, could shift the landscape. What’s more, blue-state New Jersey and red-state North Dakota agreeing on the same solution would highlight public banking’s biggest asset: transpartisan populist support. “We have Tea Partiers and Occupiers in the same room liking public banking. What does that tell you?” asks PBI’s Mike Krauss.

“Regardless of declared conservative or progressive affiliations,” says state Sen. Hasegawa, “regular folk … almost unanimously grasp the concept.” He is working with Washington’s Tea Partybacked treasurer, Duane Davidson, to advance public banking. “I go to eastern Washington, … they get the whole issue about independence from Wall Street and corporate control.”

In fact, Krauss is himself a Republican. “The biggest thing going on in America, people decided we don’t have any control anymore,” he says. “Whether it’s Bernie’s people or Trump’s people, they’re articulating the same thing but differently. … They want control of their money—and it is their money.”

 

Public Banking for Santa Fe: An Interfaith Forum

Photo:HANNAH COLTON

Elaine Sullivan of Banking on New Mexico speaks to a sanctuary full of Santa Feans at an interfaith forum on public banking, March 30, 2017.

By HANNAH COLTON • KSFR.org | APR 4, 2017

We’re looking at the latest push for a public bank for the City of Santa Fe … Last Wednesday City Councilor Renee Villarreal re-introduced a proposal to create a task force to determine what it would look like to launch a public bank. The following evening the advocacy group Banking on New Mexico hosted an interfaith dialogue about public banking and economic justice.

Donald Trump Wants to Gut Protections for Bank Customers. Here’s How to Fight Back.

Photo: FrankRamspott/iStock; KeithBishop/iStock
Call it the “public option.”

With Wall Street as greedy as it ever was, and the Trump administration seeking to ditch banking restrictions enacted in 2008 to protect the little people, a handful of cities are considering a do-it-yourself alternative: Public banking is just what it sounds like—financial institutions owned and operated by a government entity. Officials in Philadelphia and Oakland, California, are taking a hard look at the idea, and Santa Fe, New Mexico, has done a feasibility study that concluded a city-run bank would benefit the community, socially and economically. If done right, the report found, the bank would create a “robust local lending climate” and bring in millions of dollars per year in revenue.

From 1910 to 1966, Americans could deposit and borrow small sums at US post offices.

There are already successful public banks in France, Germany, Japan, Switzerland, the United Kingdom, and elsewhere. There’s even a robust American model: North Dakota has had a state-run bank for nearly a century. Although created by socialists, the Bank of North Dakota retains ironclad support among the red state’s residents, many of whom credit it for helping North Dakota weather the 2008 financial crisis. Moreover, from 1910 to 1966, US post offices operated as de facto public banks where people could deposit and borrow small sums.

Leading the push in Oakland are progressive City Council members Rebecca Kaplan and Dan Kalb. “Public banking can give us a bank that is more responsive to the needs of the community,” Kaplan told me, “rather than prioritizing the needs of shareholders who don’t live in our community or the needs of corporate profit.”
The other big impetus, Kaplan says, is to give local pot entrepreneurs a safe place to stash their cash—literally. “We have a large and growing cannabis industry which has been kept out of traditional banks,” she says, “and so getting them access to banking so they don’t have to work in cash would be very helpful.” Dispensaries and future cannabis sellers (recreational pot won’t be legal officially until 2018) won’t have to worry so much about getting robbed, and all that capital could go a long way in helping a city bank get established.Kaplan says there are two key reasons Oakland should pursue public banking. The first is that it can help low-income people—and especially people of color who may face discrimination at corporate banks—secure loans at a fair rate. “Oakland has long suffered from redlining,” Kaplan points out, and for-profit institutions can’t necessarily be trusted to refrain from discriminatory tactics.

“The beauty is that you could really tailor a public bank to target whatever a community’s needs are,” says Mehrsa Baradaran, a law professor at the University of Georgia and author of How the Other Half Banks. Baradaran, who worked on Wall Street for a decade, explains that the major banks are bad at meeting community needs because their end goal is “not to benefit the people—it’s to increase capital.” A public bank can pool local resources and apply its money to local concerns.

“Maybe a certain community has a problem with payday lending,” Baradaran offers. A public bank could provide free accounts and emergency loan services for low-income people without the predatory practices of subprime corporate lenders. “Or maybe another community has an affordable housing issue, or needs farm loans or student loans.”

Interest has spiked since the 2008 crisis: “The hostility to the private banking system is quite hot.”

The cultural climate is ripe for this conversation, says economist Richard Wolff, a retired University of Massachusetts professor who now teaches at the New School. “One of the many consequences of the collapse in 2008 has been a renewed interest in public banking,” he says. “The hostility to the private banking system is quite hot. The spectacle of bank leaders rushing to Washington and begging for a bailout was not lost on the American people.”

Not only did those bailouts trigger outrage among average people who saw no such relief, Wolff points out, but they also revealed the pseudo-public nature of private banks. “Post-bailout, we saw a discomfort with this idea that so much of the banks’ losses were being borne by the taxpayer,” Baradaran says, “while their gains were just going to their own shareholders. That’s wealth redistribution the wrong way.”

Wolff, a longtime advocate for public banking, believes that the job of managing a community’s money is too important to be delegated to for-profit corporations. “Nothing that is so socially embedded should be left in the hands of an institutional organization whose admitted, explicit first priority is maximization of profit for itself,” he says. “The goals and objectives of the private enterprise are not necessarily overlapping one for one with the social benefit.”

A public bank can resolve that tension. As the president of the Bank of North Dakota put it, “We’ve never been a bank that tries to hit home runs. That’s not what we’re all about. We have a specific mission which is more important. Most corporations and banks, their top priority is to maximize shareholder return. And that is a nice byproduct for us because we do have a nice return…But really where we take the most satisfaction is making sure we meet the needs of the state, and finance those types of things that make our state go forward.”

Cities and States Prefer Public Banks to Wall Street

Alarmed by the corruption and greed of Wall Street, many US cities and states are studying the feasibility of establishing public banks.

By John Lawrence, San Diego Free Press

Image_WS_Stole_From_You

Public banks are owned by cities, states or other jurisdictions and serve to keep funds local instead of being deposited on Wall Street. The funds are then used to support local economic activities like small business loans and student loans.

Washington State has already cut its ties with Wells Fargo because they funded DAPL. Now they want to get rid of Wall Street as a place to park their money making use of the local economy and profiting the people of Washington instead of the bankers of Wall Street. Bills were introduced on January 18 in both the House and Senate of the Washington State Legislature that add Washington to the growing number of states now actively moving to create public banking facilities.

Ellen Brown, author of Web of Debt and The Public Banking Solution writes:

The bills, House Bill 1320 and Senate Bill 5238, propose creation of a Washington Investment Trust (WIT) to “promote agriculture, education, community development, economic development, housing, and industry” by using “the resources of the people of Washington State within the state.”

Currently, all the state’s funds are deposited with Bank of America. HB 1320 proposes that, in the future, “all state funds be deposited in the Washington Investment Trust and be guaranteed by the state and used to promote the common good and public benefit of all the people and their businesses within [the] state.”

The legislation is similar to that now being studied or proposed in states including Illinois, Virginia, Hawaii, Massachusetts, Maryland, Florida, Michigan, Oregon, California, and others.

Santa Fe, NM Considers Public Bank as Trump Threatens to Take Away Funding for Sanctuary Cities

The Mayor of Santa Fe, New Mexico has declared his city to be a sanctuary city in which case Trump has threatened to deny Federal monies to the city. The Mayor noted that Santa Fe had welcomed immigrants for over 400 years. A public bank could replace that funding:

If McEvers [interviewer from NPR] had asked what possible sources of funding might replace the money Trump is threatening to take away, Gonzales might have answered that Santa Fe was in the advanced stages of considering the creation of a publicly owned bank. In late October, three City Council members introduced a resolution to take the “final steps to determine” whether a public bank would be feasible. Earlier in 2016, a local advocacy group named Banking on New Mexico released a five-year model projecting that a Santa Fe bank could reduce debt service costs by $1 million a year and earn an annual profit, netting the city over $10 million in the bank’s first five years. While that wouldn’t completely offset funds the new administration is threatening to withhold, it would put the city in better shape to absorb the loss and begin the process of building an autonomous local economy that over time could transcend much of the need for federal dollars.

Oakland, CA Gets Serious About Public Banking

Two Council members have introduced a resolution to the Oakland City Council which says in part:

Resolution Directing The City Administrator To Prepare An Informational Report With The Cost Estimates Of Commissioning A Study Analyzing The Feasibility And Economic Impact Of Establishing A Public Bank For Or Including The City Of Oakland, And Providing Funding Options For The Feasibility Study, Including The Option Of Allocating To The Study Any Remainder Of The Money That Was Budgeted For The Goldman Sachs Debarment Proceedings.

Image_PBSolution

WHEREAS, a public bank can have investment priorities that focus on the creation of jobs in Oakland that spur local economic growth by providing affordable credit to small and medium-sized businesses that have been historically ignored by the larger, more established banks; and

WHEREAS, a public bank can have investment priorities that center on providing loans for low and moderate income housing to help relieve the current housing crisis facing Oakland; and

WHEREAS, a public bank can have investment priorities that provide loans for energy conservation, installation of solar panels and measures for conserving water in Oakland; and

WHEREAS, Wall Street banks seek short-term profits for their private shareholders by investing in stocks, derivatives, credit default swaps and other speculative financial instruments; and

WHEREAS, there is a desire for local funding solutions that reinvest public funds in the local community; and

WHEREAS, public banking operates in the public interest, through institutions owned by the people through their representative governments; and

WHEREAS, public banks are able to return revenue to the community and can provide low-cost financing in support of City policies; and

WHEREAS, on September 8, 2016, Wells Fargo bank was fined $185 million for fraudulently opening up accounts without customers’ consent, which then damaged customers’ credit scores and caused customers to be charged illegal banking fees; and

WHEREAS, on May 20, 2015, Citigroup Inc. and JP Morgan Chase & Co. agreed to plead guilty to felony charges for conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange spot market; and

WHEREAS, on May 20, 2015, Citigroup Inc. agreed to pay a criminal fine of $945 million and JP Morgan Chase & Co. agreed to pay a criminal fine of $550, for illegally manipulating the foreign exchange market; and

WHEREAS, on May 20, 2015, the Federal Reserve announced that it was imposing a separate set of fines on Citigroup, Inc. and JP Morgan Chase & Co. of $342 million for their illegal practices in the foreign exchange markets; and

WHEREAS, on March 9th, 2016, the Wall Street Journal reported that Wall Street banks had paid in total more than $100 billion in fines and penalties for mortgage-related fraud, and

WHEREAS, said Wall Street banks’ criminal conduct and wrongful behavior should not be rewarded with future business dealings with Oakland; and

WHEREAS, the City of Oakland is tasked with holding and protecting the fundamental interest of the public as well as the financial well-being of the City; now, therefore be it

RESOLVED: That the Oakland City Council directs the City Administrator, or his/her designee, to prepare an informational report with the cost estimates of commissioning experts in public banking to conduct a study analyzing the feasibility and economic impact of establishing a public bank for the City of Oakland;

Please note that these are only a few of the “Whereas’s”. There’s more.

Profits to the People

Currently, the Bank of North Dakota (BND) is the only public bank in the country. All other states and cities deposit their revenues and pension funds with Wall Street with the profits going to Wall Street. That’s why so many states are in dire straits while North Dakota’s fiscal situation is just fine.

According to a January 19, 2017, New York Times article:

[A]lmost everywhere the fiscal crisis of states has grown more acute. Rainy day funds are drained, cities and towns have laid off more than 200,000 people, and Arizona even has leased out its state office building…

“It’s the time of the once unthinkable,” noted Lori Grange, deputy director of the Pew Center on the States. “Whether there are tax increases or dramatic cuts to education and vital services, the crisis is bad.”

Is it any wonder that President Pussy Grabber and his Republican cohorts are calling for the privatization of everything? Their mantra is that government is incompetent when the true fault lies in the fact that states and municipalities are being bled to death by Wall Street. Wall Street banks borrow money from the Fed at zero percent interest and then loan it to municipalities at 5% interest. That profit could go to the municipalities. The antidote for that is to establish a public bank from which profits will flow to the people as they have in North Dakota. Local control of local money should be the mantra.

There is a move in Congress to let states go bankrupt the way many US cities have. For instance, San Bernardino, CA; Stockton, CA; Orange County, CA; Jefferson County, AL; and Detroit, MI have all declared bankruptcy with the result that concomitant pension fund and contractual obligations to unions and others have gone by the wayside.

While those and other cities have been drained by the Wall Street banking crisis which resulted in increased borrowing costs and loss of revenues, BND and North Dakota have churned along quite nicely, thank you very much. They have provided low-cost affordable loans to small businesses and students, thus totally averting the worst effects that most cities and states which rely on Wall Street have suffered.

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BND provides back-up for local private banks by offering check clearing services and liquidity support. They invest in North Dakota municipal bonds to provide economic development. In the last ten years, the BND has returned more than a third of a billion dollars to the state’s general fund. North Dakota is one of the few states to consistently post a budget surplus.

Washington State Representative Bob Hasegawa, a prime sponsor of the Washington legislation, called the proposal for a publicly-owned bank “a simple concept that will reap huge benefits for Washington.”

In a letter to constituents, he explained, “The concept (is) to keep taxpayers’ money working here in Washington to build our economy. Currently, all tax revenues go into a ‘Concentration Account’ held by the Bank of America. BoA makes money off our money and we never see those profits again. Instead, we can create our own institution and keep taxpayers’ dollars here in Washington, working for Washington.

Dennis Ortblad writes in the Seattle Times:

“In fact, we propose a public bank in Washington that lends primarily to public institutions — such as school districts, affordable housing programs, public utilities — in order to reduce the state’s or a municipality’s reliance on the expensive bonds and fees in Wall Street markets.”

While President Pussy Grabber, Betsy DeVos and Repubs in general want to privatize everything, a public bank would help to shore up public enterprises like the public school system and local infrastructure. BND has a sterling credit record and earned for the state $130 million in 2015 alone, with total assets of $7.4 billion (its 12th consecutive year of record profits for the people of the state). That $130 million would have gone to Wall Street in any other state.

The US banking system including its central bank, the Federal Reserve, is privately owned. Is it any wonder that during the banking crisis of 2008, the first and only order of business was to bail out the banks, not homeowners who were overdue in their mortgages? They were hung out to dry despite the fact that many were told the bank would “help” them either by lowering interest rates, refinancing or forgiving principal in “underwater” mortgages. A public banking system is beholden not to private interests but to the people of the state or city in which it’s registered.

In an article, Seattle Votes to End $3 Billion Relationship with Wells Fargo Because of the Bank’s Dakota Access Pipeline Financing, Sydney Brownstone writes:

The Seattle City Council has unanimously voted to end the city’s relationship with Wells Fargo over the bank’s financing of the Dakota Access Pipeline (DAPL), its financing of private prison companies, and a regulatory scandal involving the bank’s creation of two million unauthorized accounts.

All nine council members voted to take $3 billion of city funds away from the bank after Seattle’s current contract expires in 2018. The vote occurred just hours after the Army notified Congress that it will be granting an easement allowing DAPL builders to drill under the Missouri River following a presidential memo from Donald Trump.

That $3 billion could find a home in a Seattle or Washington state public bank when one becomes available. All they have to do is mimic North Dakota’s public bank which has been working well for over 100 years. The Public Banking Institute is working on a model which could be replicated in cities and states throughout the US. All city council members would have to do is to vote to replicate the model.

One Seattle City Council member who is determined to bring about a public bank is Kshama Sawant. She is an American socialist politician, activist, and member of the Socialist Alternative. A former software engineer, Sawant became a socialist activist and part-time economics instructor in Seattle after immigrating to the United States. Sawant ran unsuccessfully for the Washington House of Representatives before winning her seat on the Seattle City Council. Sawant was the first socialist to win a city-wide election in Seattle since Anna Louise Strong was elected to the School Board in 1916. Socialist Alternative describes itself as “a community of activists fighting against budget cuts in public services; fighting for living wage jobs and militant, democratic unions; and people of all colors speaking out against racism and attacks on immigrants, students organizing against tuition hikes and war,

Sawant ran unsuccessfully for the Washington House of Representatives before winning her seat on the Seattle City Council. Sawant was the first socialist to win a city-wide election in Seattle since Anna Louise Strong was elected to the School Board in 1916. Socialist Alternative describes itself as “a community of activists fighting against budget cuts in public services; fighting for living wage jobs and militant, democratic unions; and people of all colors speaking out against racism and attacks on immigrants, students organizing against tuition hikes and war, women, and men fighting sexism and homophobia.”

A public bank could cut the cost of building public schools in Washington in half. Half the cost of building new schools is in interest paid to banks and bondholders. That would all come back to state or city coffers depending on whether the
schools were financed by a state or city public bank.

InfoGraphic_WallStreetBanksGraphic: Washington Public Banking Coalition

From the Washington Public Bank Coalition website:

How Our State Can Solve Its Budget Crisis: Create a Public Bank

Cut spending, fire teachers, raise taxes—these are the solutions always proposed to offset Washington State’s budget deficits.  The state’s budget crises do not arise from too much spending or too little taxation on the poor and middle class. Instead, since 2000, corporate tax breaks in Washington State have more than doubled. The state simply isn’t getting enough tax revenue from corporations (see: realwashingtonstatebudget.info).

Also, since the 2008 financial market collapse, banks have cut back on lending.  When small local businesses can’t secure low-interest loans, there are layoffs and business closures in the private sector, which also cause state revenues to plummet. To solve this problem, since 2010, 17 states, including Washington State, have drafted legislation to establish public banks based on the successful Bank of North Dakota.

A Public Bank for Cities in San Diego County

There is a local movement to create a public bank in San Diego. A group has been meeting regularly and is studying the possibilities for several cities within San Diego County. They are meeting with local officials people and hope to use the Oakland Resolution cited partially above as a first step in getting the ball rolling.

Notwithstanding some setbacks and some attrition of the ranks, our courageous group continues to fight for banking reform and the creation of public banks throughout California.  We have been encouraged by the recent success in Oakland with the unanimous approval of the Public Banking Resolution by their City Council. It gives us hope! We need referrals to the mayors, city Council members and finance directors for the 18 incorporated cities in San Diego County to stop our money from flowing to Wall Street!

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John Lawrence graduated from Georgia Tech, Stanford and University of California at San Diego. While at UCSD, he was one of the original writer/workers on the San Diego Free Press in the late 1960s. He founded the San Diego Jazz Society in 1984 which had grants from the San Diego Commission for Arts and Culture and presented both local and nationally known jazz artists. John received a Society of Professional Journalists, San Diego chapter, 2014 award. His website is Social Choice and Beyond which exemplifies his interest in Economic Democracy. His book is East West Synthesis. He also blogs at Will Blog For Food. He can be reached at j.c.lawrence@cox.net.